About the Company
With nearly $14 trillion dollars under management, JPMorgan Worldwide Securities Services (WSS) – a division of JPMorgan Chase Bank – is among the world’s largest custodian banks. It offers a wide range of highly data-driven investor services to the globe’s biggest and most profitable asset management firms, hedge funds and equity issuers – including custody, broking, fund accounting, and administration services across more than 90 financial markets.
Technology has for long been central to the organisation’s service offering, but its role has grown even more critical with the expanding geographical reach and increasing complexity of financial markets. As a result, annual spending on technology is running at around $600 million.
JPMorgan WSS CTO John Galante has spent the last two years developing technology strategies to keep apace with these demands, overseeing the activities of more than 1,500 IT staff spread across the United States, Europe and Asia/Pacific.
Currently, Galante is heading up a $100 million project to redesign JPMorgan WSS’s customer delivery platform, with the aim of providing the banks’ customers with seamless access to their transaction histories, positions, settlement data, and sales and accounting information. At the centre of that is VIEWS, a vast reporting platform for custody and securities services.
Information Age (IA): JPMorgan has invested $100 million in building a state-of-the-art reporting platform for its asset management clients. What was the business case for such a staggering commitment?
John Galante (JG): When I joined two and a half years ago, I found tremendous talent at JPMorgan and a tremendous focus on the customer, but we had a lot of different technology servicing the customer. What we really needed was an architecture that would be flexible enough to service different needs but not necessarily different applications. So we made the decision to invest a lot of time around the client-facing technology.
JPMorgan had already initiated the VIEWS project when I joined, and we delivered the first release of the programme last year, and we expect to issue subsequent releases and phases throughout 2007, including a new user interface that will include dashboard and alerts for our clients. We now have more than 1,000 clients using the platform.
IA: So is the technology programme also a response to the changing technological demands of your clients?
JG: Yes, we spend a lot of time speaking with our clients to see how we can improve things. We are the biggest custodian in the world, and in 2006 we underwent the largest transferral of assets ($770 billion) in one transaction when we took on Freddie Mac [the largest US investor in mortgages]. Such deals are indicative of a growing trend in financial markets: in many cases, asset managers want to focus their own technology dollars on the ability to invest their money more effectively. They’re in the business of making investments, within treasury and security services, and we’re in the business of servicing those assets.
Our customers don’t want to continue to invest in back office processing, or at least they want to keep that to a minimum. As a result, they are increasingly turning to service providers like JPMorgan to in-source some of this processing and support, from both an operations and technology point of view. So it’s crucial that the back office gets the technology investment it needs to do that, and we’re not afraid to spend the money because we see this as our core business.
IA: How do you decide what technology to build for yourself and what you should buy from the vendor market?
JG: I typically decide by the maturity of the functions and domains of the vendors. Because we’re so global in our servicing, we have multiple accounting engines for example. So in some cases we may use a Hi Portfolio [an investment accounting product from DST International] in Asia, South Africa and UK insurance clients, while we use a SunGard product for US mutual funds, international mutual funds, and asset managers; and then we have the Advent Geneva platform to service hedge funds.
We are leveraging those accounting engines to service clients around the world who hold different asset classes, but we’re doing this in the context of a standard architecture. Those are good examples of things that are very mature in the marketplace and it doesn’t make sense for us to build our own engine – I don’t think that’s going to distinguish us.
Name: John Galante
Company: JP Morgan Worldwide Securities Services
Title: Senior vice president and CTO
Providing clients with a comprehensive reporting platform through the collating and integration of the mass of data generated by their asset management activity.
With nearly 25 years’ experience in the financial services industry, Galante has worked at a range of major global financial institutions other than JPMorgan, including Merrill Lynch, Citigroup and Salomon Brothers.
IA: So what technology-driven services do you think will distinguish you from your competitors?
JG: What will distinguish us is an ability to integrate all the data relating to our various clients and then to offer that data back to the client in a timely and accurate manner. One of the challenges in doing this is getting the data from our customer base into an integratable form.
The strategy we have in place to achieve that involves a messaging engine at the front end to receive data from our clients. That enables our clients to send any information in virtually any format. We convert that to a standard XML format and then pass it along to our core processing engines. Those are specialised technologies in some cases, some custom built, in others provided by vendors; either way we have routing of messages into those engines, and those transport that data into the VIEWS portfolio reporting repository, which then enables data to get back out to clients.
We’ve also addressed some of the data reading issues by using optical character reader capabilities, but that’s really an area we have to continue to focus on across all of our asset classes.
IA: Data integration is a major issue for most organisations, but are you finding this more challenging in your sector with the complex trading strategies that fund managers want to employ?
JG: The challenge of capturing data and providing it back to clients in a useful format really is multiplied in the alternative investment space because of the complexity of the assets. The question is, how do we industrialise the servicing of the alternative investment asset base?
We’ve been focusing on programme in which we take our hedge fund services and derivative services and look at what kinds of messaging layers we need to put in place to capture our customers’ transactions. We’re working with a few customers to include formats in FpML [a version of XML for financial products].
At the same time, we are examining what core engines already exist that we can leverage, and how we can leverage capability like the VIEWS platform to provide the data and reporting customers need. It’s almost like our core investments on steroids in this space, because the investments are more concentrated.